Jardine C&C. 12k profit in 3 months.

mercedes logo bf gf

jardine c&c mercedes

 

Sorry for tooting my own horn.  Now that I have gotten your attention, I just want to let you know that this post here is to illustrate the power of knowledge and not to trade in and out of the market short term.

 

I would also want to recommend an investment book which I find very useful.  This investment book has helped me understand market volatility and prepped me psychologically to take advantage of drops in share prices.  I am sure the book will come in handy for those of you out there waiting to enter the market during a correction.  (On a sidenote, haven’t we been waiting for a bear market since 2010???)

 

The book I am talking about is Contrarian Investment Strategies by David Dreman.  In his book, he talks about bubbles, panics, volatility and how to profit through them.  One thing I love about the book is its explanation of how bubbles form.  It is a very insightful read that many value investing books don’t teach you about.  After reading the book, I started keeping my eye out for bad news, itching to make a profit from fear in the market.

 

I chanced upon an article in February 2014 reporting about how the a fall in rupiah was affecting Jardine C&C earnings.  In case you all don’t know, Jardine C&C owns majority shares in a company called Astra, which is a distributor of cars in Southeast Asia.  In Indonesia, Astra dominates about 50% of the market share for car distributorship.  This is important as the main bulk of Jardine C&C’s revenue comes from Astra.

 

Knowing that Jardine C&C was a relatively stable blue chip stock, I decided to take a look at how its stock price was affected by this currency fluctuation.

Jardine C C bfgfmoneyblog

 

The stock price had fallen from a peak of $54 to almost a low of $36 when I found out about the news.

 

I went to read up on the financials of the company and the CEO even cited that Astra lost about 1-2% market share to competitors in Indonesia.  I saw that the earnings-per-share dropped by 19% by comparing the 9 months from 2012-2013.  Debt from 2012-2013 was also more or less unchanged and Free Cash Flow in Q3 2013 was positive and even showed an increase.  Surely the fears have been overdone?!

 

I felt that the price should be around $45, and that the current price of $36.1 was way too cheap.  I also thought that currency fluctuations would correct themselves over time and that Jardine C&C’s management would be capable enough to ride out the tide.  After all, they were the guys who brought the stock from an IPO price of about $4 in 2000 to a peak of $54 in 2013!  What great businessmen!  Even if I was wrong, I could just hold on and collect the dividends of about 3.5% then.

 

I bought, shoved in the money and waited.  Little did I realise, Joko Widodo was campaigning for presidency then and market expectations of him winning pushed Jardine C&C to a price of $49 within a short span of 3 months.  That’s a gain of 35%.  Again, I thought, this is irrational!  The market has to be over-reacting to this news.

 

The CEO of Jardine even warned that 2014 would continue to be a tough year for the company.  I pondered whether to sell.  By then, I had already spotted other stocks which I felt were undervalued.  I decided that although value investing is a proponent for buying and holding long term, this irrational run up in stock price gives me the chance to exit early.  I sold the stock with a sweet 12k plus profit but I felt slightly guilty – for holding a stock for only 3 months. I have to admit though, that I felt mostly satisfied.

 

Feeling rich, I went to Uniqlo to buy a pair of $36 berms to reward my “good decision”.  I then saw the sign “Retail Assistants Needed, $1.6k per month”.  Suddenly, it hit me:

 

I had just made 12k doing nothing but sitting on my ass, clicking the mouse, and reading some financial reports.  The overall process probably took me less than 2 hours of my time.  I have just made the same amount of money these retail assistants would have made working for 6 months!

 

( Dear reader, I hope you don’t take offence here.  I used to work part-time in retail before.  It was damn xiong.  Let me continue…)

 

After I paid for my berms, I couldn’t stop thinking about the power of knowledge versus skill-based menial labour.  For skill-based labour, you can perform the job and get paid.  But with Knowledge, your earning power increases as you will be equipped with more tools to make more money!  It is a compounding effect!  It applies to jobs too.  The more you learn, the greater your value, the higher your earning power.  You can command a higher salary with more Knowledge; you can make use of your Knowledge to improve your business or even start a sideline.

 

I traced back to all the times I had spent poring over investment books, desperately trying to absorb everything like a sponge.  It had all paid off.  The money I invested, has rolled and accumulated till I could shove it into Jardine C&C, before I took it out and reinvested into other stocks.

 

I remembered just a few years back, I was sitting on a bus after work, reading an investment book diligently and a colleague said to me:

 

“Wow, how can you keep reading these kind of books?”

I replied, “Don’t you think investing is an important skill that schools don’t teach?”

“True,”he agreed. “But I got no time to read… haizzz…”

 

He then proceeded to play Candy Crush on his Iphone for the next 45 minutes of the bus ride.

 

Ever since my realisation after the Jardine C&C trade, I became a knowledge addict.  I started learning as much as I could in whatever I deem useful.  I gobbled down more investment books, more business books, attended online courses and even learnt skills that are unrelated to investing like ( SEO, coding, marketing, website development, leadership, negotiation, etc.)  Whenever I am driving around, I will be tuning in to entrepreneur podcasts to learn more from the experiences of others.

 

I am hooked on Knowledge.

 

Strangely, the more you know, the more you realise you don’t know.  Would I have made that Jardine C&C trade if the same opportunity presents itself today?

 

No.

 

My investing style has changed drastically within 1 year and I would never commit myself to such concentration risk again.

 

Oh, the irony of knowing more!

 

Dear readers, it’s not too late to start learning.  I strongly recommend you get this book Contrarian Investment Strategies: The Psychological Edge

 

Or would you rather use your time to play Candy Crush?

Feel free to click on the image to go to Amazon.

 

Here’s another way to enrich your knowledge…

 

[ 3  Undervalued Stocks to be Revealed ]

 

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600 investors gathering behind closed doors for 1 full day of intensive learning and discussion.

I have gotten my tickets to the Invest X Congress 2015.  And you can join me too.

Victor and Rusmin from the Fifth Person will be providing a detailed analysis of 3 stocks.  All you need to do is to take some notes!

Other speakers include:

AK, the man who earns $150K in yearly dividends.

Tay Jun Hao, who manages his family portfolio at annualised returns of mind-blowing 27%

Topics that will be covered:

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Tickets are Running out.  Click on the image below to get them now!

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14 Comments

  1. B

    Hi Bfgf

    I was monitoring jardine c&c as well at the time they dropped to $32 and I was about to get in but thought I would require further margin of safety due to the 1000shares lot size that time that makes this a rather big investment.

    To be fair, there were concerns about the state law regarding fuel tax which I blogged about last time which could affect the sales of these cars but kudos to you for making the choice and its one way up from there.

    Reply
    1. The Bf (Post author)

      Haha.. crap I didn’t know about those state laws.

      Again, if given the choice, I wouldn’t make the trade again.

      Reply
  2. Createwealth8888

    When the Bull is charging hard, some will begin to develop “Gu Shen” feeling. I have been there before. Good feeling to enjoy! Hee Hee!

    Reply
    1. The Bf (Post author)

      Don’t you think it’s a dangerous feeling too?

      Reply
      1. Createwealth8888

        I read many investment books in our NLB until I have hard time finding another one book to read; but after so many books I still lost money back to the stock market when Mr. Market changed his mood. In the stock market; whatever we get from Mr. Market it is always earnING and not earnED. Nowadays, I am trying out how to make it earnED instead of earnING.

        🙂

        Reply
        1. The Bf (Post author)

          Yes I totally agree. One profit doesn’t mean I will continue profiting again and again in the next 10 years.

          That is why I am slowly changing my portfolio to hold stocks that can last 10 years or more and not just rely on my “valuations” to buy “undervalued stocks” and sell when they are “over-valued” and repeating the same process again.

          Perhaps you can try a framework of buying companies whose products and services can last 10 years? – I am doing that now. Whether I will be successful or not, this blog acts as a record.

          Reply
  3. Zulu

    Blah blah blah justify on hind sight. I did the same and won Toto 1m. 50 cents becomes 1m in 1 week. 2m bagger sio!

    Reply
    1. The Bf (Post author)

      Haha Zulu,

      To make sure I don’t justfiy on hindsight, you can follow the other stocks which I recently bought here. Sorry if this post sounds like justifying on hindsight, but I wasn’t blogging last year.

      Congrats on your Toto win.

      Reply
  4. SGYI

    Hi bfgf,

    Congrats on your profit. It is indeed quite a lot of profits there.

    But to be fair, putting in that 30k+ into one stock is quite risky. I suppose you bought 1000 shares of it back then to make the 12k profit? Unless you have quite a big investment capital (> 200k), this one investment would have made up almost all of your portfolio. If it goes down, then you lose a lot also.

    Reply
    1. The Bf (Post author)

      Yup, if it goes down this blog wouldn’t exist anymore.

      Too much concentration risk there. And I have an overconfidence bias which surface from time to time.

      Maybe that’s why it’s good to blog. Fellow investors can question my thesis and force me to “wake up my idea”.

      Reply
  5. imp

    I just feel this post is to market your amazon book to reap in profits from the link you posted.

    if you definitely made profit, hats off to you.

    Reply
    1. The Bf (Post author)

      Hi imp,

      Yup I am doing some affiliate marketing. I love sales!

      But to be honest, that book is really insightful. And yes, the profit is real.

      No hats off to me, this ‘investment’ was really questionable, I must admit. Either ways, I hope you continue reading my blog to see how my investments pan out from now till 10 years on.

      Reply
  6. Rolf
    1. The Bf (Post author)

      Great review! Somehow I can’t find my book anymore. I think I lent it to a friend. Some rules gotta be reviewed on case by case basis though.

      I particularly like this one:

      Rule 32: Volatility is not risk. Avoid investment advice based on volatility.

      Reply

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